@ rehmanau: Your welcome, unfortunately you were a victim of a common situation, Generally the best treatment is withholding 20% of escrow payment until property is safety in your hands.
Your expenses can be deducted only up to your rental income ,your rental expense deduction is limited.[Even a Schedule E reporting will limit expenses due to vacation rental rules]
Your basis is not effected.
If repairs rises to the range of improvements the amount above rental income are added to basis for when you sell.
Unfortunately the IRS states : that expenses for personal use are not deductible as rental expenses.
Personal property taxes and mortgage interest with reporting income on line 21 as a not for profit rental are fully deductible personal expenses.
